In this study, the performance of wastewater treatment plant located at sector I-9 Islamabad, Pakistan, was evaluated. This full scale domestic wastewater treatment plant is based on conventional activated sludge process. The parameters which were monitored regularly included total suspended solids (TSS), mixed liquor suspended solids (MLSS), mixed liquor volatile suspended solids (MLVSS), biological oxygen demand (BOD), and chemical oxygen demand (COD). It was found that the biological degradation efficiency of the plant was below the desired levels in terms of COD and BOD. Also the plant operators were not maintaining consistent sludge retention time (SRT). Abrupt discharge of MLSS through the Surplus Activated sludge (SAS) pump was the main reason for the low MLSS in the aeration tank and consequently low treatment performance. In this study the SRT was optimized based on desired MLSS concentration between 3,000–3,500 mg/L and required performance in terms of BOD, COD and TSS. This study revealed that SRT is a very important operational parameter and its knowledge and correct implementation by the plant operators should be mandatory.